Jan 12, 2014

The Next Wave of Health Insurance Cancellations Will Hit October 2014

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Right before the midterms.

But according to industry analysts, insurers and state regulators, the disruption will be far greater, potentially affecting millions of people who receive insurance through small employers by the end of 2014.

While some cancellation notices already have gone out, insurers say the bulk of the letters will be sent in October, shortly before the next open-enrollment period begins. The timing — right before the midterm elections — could be difficult for Democrats who are already fending off Republican attacks about the Affordable Care Act and its troubled rollout.

Some of the small-business cancellations are occurring because the policies don’t meet the law’s basic coverage requirements. But many are related only indirectly to the law; insurers are trying to move customers to new plans designed to offset the financial and administrative risks associated with the health-care overhaul. As part of that, they are consolidating their plan offerings to maximize profits and streamline how they manage them.

“If they do it one way, the word canceled gets attached to it. If they do it another way, they say they are amending the policy. It sounds more gentle but it’s the same thing,” said Gary Claxton, an expert in private insurance at the Kaiser Family Foundation. “The basic point is, for many people in the small-group market at some point soon their coverage is going to change.”

I wonder if the President will try to find a way to rejigger things so that the letters go out after the elections. At this point, I wouldn’t even be surprised.

Update: LawProf Seth Chandler posted this comment on Facebook.

 I guess you missed the interim regulation at 46 CFR 156.217(c) “The term October as used in 
(a) any large or small group health plan
(b) any insurance policy sold in the small or large group market, or
(c) any document by any health plan or insurance policy that purports to renew, cancel, modify or amend the same in a way that might reduce confidence in this Act 
shall, for any even numbered year, be deemed to refer to the month of December.”

Until I had the chance to Google it, I totally thought it was real. That’s really sad. October = December in election years.

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